Monday, 16 July 2012

European Stocks Fluctuate After SixWeek Rally; SEB Rises

By Adria Cimino - Jul 16, 2012 2:12 PM GMT+0400

European stocks fluctuated between advances and declines after the benchmark Stoxx Europe 600 Index completed its longest stretch of weekly gains in more than two years. U.S. index futures fell while Asian shares rose.

SEB (SEBA) AB, the Swedish bank that’s the second-largest lender in the Baltic countries, soared 7.4 percent after earnings topped estimates. G4S Plc (GFS) sank 8.8 percent as the world’s biggest security company said it may incur a 50 million-pound ($78 million) loss after failing to provide enough guards for the Olympic Games.

July 13 (Bloomberg) -- Warren Buffett, the billionaire chairman of Berkshire Hathaway Inc., talks about the outlook for the euro, the U.S. banking system and housing market. Buffett speaks with Betty Liu on Bloomberg Television's "In the Loop." (Source: Bloomberg)

The Stoxx 600 (SXXP) added less than 0.1 percent to 256.34 at 11:11 a.m. in London. The gauge had climbed for six straight weeks, rallying 9.6 percent from this year’s low on June 4, as the European Central Bank and People’s Bank of China cut their benchmark interest rates and euro-area leaders eased repayment rules for Spanish banks and conditions for possible Italian aid.

“Investors have remained very underweight,” Robert Parker, senior adviser at Credit Suisse Asset Management in London, said in a Bloomberg Television interview. “The earnings season will run another month and expectations are so negative that the downside risk is low.”

ASML Holding NV will be the first member of the Euro Stoxx 50 Index to report earnings this quarter when Europe’s biggest maker of semiconductor equipment releases results on July 18.Analysts estimate companies in the gauge will post profit of 240.63 euros a share this year, down from 267.93 euros on Jan. 2, Bloomberg data show.

U.S. Shares

Asian stocks advanced after Premier Wen Jiabao said China will increase measures to support the world’s second-largest economy. The government will step up policy fine-tuning in the second half of the year to spur growth, the official Xinhua News Agency reported him as saying yesterday, reiterating comments Wen made during a visit to eastern Jiangsu province earlier this month.

Retail sales in the U.S. probably rose in June for the first time in three months as a gain in automobile demand outweighed spending on other goods, economists said before a report at 8:30 a.m. Washington time. The projected 0.2 percent advance would follow a 0.2 percent May drop, according to the median forecast of 72 economists surveyed by Bloomberg.

Also today, data from the Federal Reserve Bank of New York is projected to show factories in its region expanded at a faster pace in July. A 10 a.m. report from the Commerce Department may show inventories at U.S. businesses increased.

Merkel’s Stance

German Chancellor Angela Merkel said yesterday she hadn’t softened her stance at last month’s summit in Brussels and that a so-called banking union involving a bloc-wide financial overseer will have to include joint oversight on a “new level.”

German lawmakers will interrupt their summer vacations and return to Berlin on July 19 to vote to approve 100 billion euros ($122 billion) in rescue loans to Spain. Euro-area finance ministers will confer on July 20 to complete an agreement on Spain’s bank bailout.

“The market is like a yo-yo,” said Louis de Fels, a Paris-based money manager at Raymond James Asset Management International, which oversees $35 billion worldwide. “As long as we don’t have a real solution for the European debt crisis and we continue to have profit warnings, there isn’t much support for a bull market.”

Financial Crisis

JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon told analysts Europe is moving toward solving its financial crisis, while billionaire Warren Buffett said the region’s common currency is doomed to fail without an overhaul in how it works.

“You see progress, you know, two steps forward, one step back,” Dimon said in a July 13 meeting in New York. Buffett, speaking contemporaneously in a Bloomberg Television interview from Sun Valley, Idaho, said European leaders face “major problems” and the 17-country euro area may not survive.

SEB rose 7.4 percent to 48.64 kronor. The Stockholm-based bank said second-quarter net income fell to 3.01 billion kronor ($427 million) from 3.36 billion kronor a year earlier, exceeding the average estimate of 13 analysts surveyed by Bloomberg for profit of 2.57 billion kronor.

G4S slid 8.8 percent to 254.2 pence as the company estimated its loss on the Olympics contract will be 35 million pounds to 50 million pounds. The U.K. government had to assign 3,500 extra soldiers to Olympic venues last week as G4S said it couldn’t train enough guards.

PostNL, H&M

PostNL NV (PNL) sank 5 percent to 3.21 euros. The company may not pay a dividend this year if the planned takeover of TNT Express NV by United Parcel Services Inc. is further delayed, Het Financieele Dagblad reported, citing an unidentified spokesman. PostNL owns 29.8 percent of TNT Express.

Sage Group Plc (SGE) declined 3.3 percent to 275.6 pence after the U.K.’s biggest software maker said conditions in Europe have toughened.

“Overall performance in Europe has been flat and the anticipated improvement in growth over the first half has not yet materialised,” the company said in a statement.

Nokia Oyj (NOK1V) slipped 2.1 percent to 1.48 euros. The price of Nokia’s Lumia 900, the smartphone on which the company is counting to revive U.S. sales, was cut in half at AT&T Inc. in a sign the device is struggling to lure users away from the iPhone and Android models.

Delta Lloyd NV (DL) increased 1.8 percent to 11.35 euros, a third day of gains. The Dutch insurer was upgraded to buy from neutral at Citigroup Inc.